Colorado Springs $1 land deal with Greccio Housing raises questions

Colorado Springs — Concerns of favoritism and violation of city codes emerged when the Colorado Springs City Council passed a resolution Tuesday to sell a 1-acre lot of surplus city property for one dollar to Greccio Housing without putting it out for competitive bids.

The vacant parcel at 4921 Templeton Gap Road is the perfect place for a 3-story 50-unit affordable senior housing development says city housing and urban development program manager Steve Posey.

Posey told the City Council at a March 12 work session that he has been in discussions for a year with Greccio Housing and Medici Group, a local developer, about developing the property for the “public purpose” of creating affordable senior housing.

Colorado Springs City Hall

Posey publicly presented the proposal for the first time to City Council at a March 12 work session. The proposal consists only of a resolution to sell the property to Greccio Housing for one dollar. No design or development plans were presented.

Posey went through an internal process of asking all other city departments if they had a use for the land as a predicate to selling the property. No departments expressed an interest. Posey then said he wanted to use it for the public purpose of increasing the city’s portfolio of affordable housing.

Both the city code and the rules of the City Council generally call for disposal of public property through a sealed-bid auction at not less than the fair market value, as determined by an appraisal. Posey says the parcel is worth about $570,000, but no appraisal was attached to the meeting information packet.

“Provisions that require government owned property to be sold for not less than fair market value serve critical anticorruption purposes and exist to limit insiders or others from getting an unfair sweetheart deal,” said attorney Michael Francisco, former Colorado Assistant Solicitor General and partner of MRDLaw in Colorado Springs.

City real estate services manager Darlene Kennedy said city code permits sale of the city property to Greccio without going through a competitive bidding process because it falls under section 5.4 of the city code, which allows property to be sold “if there is only one logical, potential purchaser.”

Posey claims that Greccio is the only logical potential purchaser because Greccio has prior experience in developing low-income housing projects in Colorado Springs and because Greccio has already spent time and money investigating the feasibility of the project. Posey said he has not sought out other potential developers.

City code 5.4 (b) however, goes on to say, “The sales price must not be less than the fair market value and must be contingent upon City Council approval,” and that a written appraisal is required in all cases. Kennedy did not cite those provisions of the code to the Council.

Councilman Don Knight questioned this lack of adherence to regulations at both the March 12 and March 27 meetings. “I’m concerned that we are not following our own laws,” Knight said.

In justifying the single-buyer exemption Posey extolled Greccio saying, “They have really positioned themselves as a development sponsor in this community that really wants to take affordable housing on and be involved in as many projects as possible that would provide additional affordable housing for the community.”

“Just because they are the best ones to do it doesn’t mean they are the one logical potential purchaser though,” Knight pointed out.

The City Council rules of procedure, section 6.1 provides no exception to the requirement for a sealed-bid process and a fair market value as the required minimum. The resolution approved March 27 waives council rule of procedure 6.1 but not city code 5.4 (b).

Councilwoman Jill Gaebler was present at the March 12 meeting and spoke strongly in favor of the project, but she was excused from the March 27 meeting where the vote was taken.

Gaebler, a former employee of Greccio Housing, has been criticized before over her involvement with Greccio. She voted to deny an appeal of the city planning commission’s approval of another Greccio low-income development called The Ridge. At that hearing Gaebler went on record to deny a conflict of interest. She said that after consultation with the City Attorney she felt confident that she could rule objectively on the appeal. She voted to deny the appeal and allow the project to move forward.

Rebecca Marshall, speaking for Springs Taxpayers, a local citizen advocacy organization, is concerned that the council is playing fast and loose with the rules. She says that the council is depriving Colorado Springs taxpayers of more than half a million dollars without going through the proper procedure and is denying other developers the opportunity to bid on the project.

“Greccio has very close ties to the people who work for our city and the people that we have elected in our city. I believe the process is wrong in representing the taxpayer. The process needs to be followed and it’s not being followed in any of this.”

Both Marshall and Knight expressed concerns that the city’s close relationship with Greccio is excluding other potential developers unfairly. “I had no idea that this was going to come for a vote on the 27th. You blink and it was right there. It seems like it was an awful rush to push this through,” said Marshall.

Marshall requested documents from the city March 19 under the Colorado Open Records Act after hearing about the proposed sale. The resolution was added to the council agenda for March 27 after she submitted her request.

By law CORA requests must be processed within three working days, a deadline that can be extended for large requests or where the records are not easily available. The city responded to Marshall requesting a seven-day extension but did not specify why the added time was needed as the law requires.

As of publication Marshall still has not received the requested documents, which included the original land donation agreement, the required appraisal and communications between Posey and Darlene Kennedy.

The decision to sell the property was approved March 27 on a 7 to 1 vote with Councilman Don Knight voting no and Councilwoman Jill Gaebler excused.